FEATURE
Greenwashing Just Got More Expensive in Canada By NIKIFOROS IATROU, MICHAEL CALDECOTT AND LEILA FAR SOARES
W
henever you highlight the environmental attributes of a product or service, the risk of “greenwashing” — making false, misleading or unsupported environmental claims — arises. In Canada, competition law has emerged as a key regulatory mechanism in the battle against greenwashing. Canada enacted significant amendments to the Competition Act this summer, including skyrocketing penalties for engaging in deceptive marketing. These changes merit urgent consideration by companies
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selling in or into Canada. The risk of a face-off with Canada’s competition watchdog, the Competition Bureau, is more costly than ever. This is particularly important for companies making environmental claims. Greenwashing is a Bureau priority. The 2022 Amendments to the Competition Act became law in June. Key among them was the introduction of significantly larger administrative monetary penalties (AMPs), which previously were capped at CAD $10M for a first infringement. Now, AMPs can be up to three times the value of the benefit
NOVEMBER 2022
derived from the deception or, if this cannot be reasonably determined, up to 3 percent of a company’s annual worldwide gross revenues. This surpasses the penalties imposed by the U.S. Federal Trade Commission for similar conduct, where the highest greenwashing penalty has been $3 million over the “eco-friendliness” of bamboo textiles. The increase in Canada was introduced to address concerns that the prior AMPs amounted to a pittance for the world’s largest firms. To provide a strong financial incentive for businesses to comply with the Competition Act, the Bureau’s view was that AMPs must be “greater than the profit that the [firm] might realize as a result of its anti-competitive conduct.” Additionally, liability is not limited to AMPs. Businesses face another risk: class actions. In Canada, as in the United States, consumer class actions related to deceptive advertising now abound. Businesses should account for the impact class proceedings could have on their brand and reputation.
PRACTICAL ADVICE FOR MAKING ENVIRONMENTAL CLAIMS Despite the increased emphasis on enforcement, the Bureau has issued minimal guidance for making BACK TO CONTENTS
